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Xi Jinping, Vice President of People’s Republic of China paid an official visit to Vietnam from 20-22 December 2011. He met President Truong Tan San, Prime Minister Nguyen Tan Dung and other senior officials of the country. What does China and Vietnam expect out of this high level visit? Is China trying to mend ways with Vietnam? If so, will Vietnam respond positively?

During the visit China laid emphasis on strengthening strategic relationship with Vietnam. It promised economic assistance, increased bilateral trade and cooperation in education, youth affairs and health. Vice President Xi said that China-Vietnam relations bear great strategic importance to both countries at this point of time. He hoped that the relations will continue to deepen under the motto “friendly neighbourliness, comprehensive cooperation, long-term stability and looking toward the future” and the spirit of “good neighbours, good friends, good comrades, and good partners.” Xi Jinping hoped to take their strategic partnership to a new height on commonalities of ideology. Both sides agreed to increase high level visits and maintain close cooperation between two parties. A delegation of Chinese youth communist league visited Vietnam on a parallel. Leaders from both sides hailed role of youth in strengthening friendship between the two countries.

Vietnam would receive preferential credits worth US$300 million from China for development of infrastructure and towards other areas of cooperation. China Development Bank signed an agreement to lend US$ 200 million to Bank for Investment and Development of Vietnam (BIDV) for a period of five years. Xi hoped the bilateral trade to reach US$ 60 billion by 2015.

This move is particularly significant. One, it comes when Vietnam’s economy is low; inflation rate is over 20 per cent and its market is losing attraction as an investment destination. Chinese monetary aid comes in dire need. No other country has come forward to rescue Vietnam’s economic woes. The move is of course strategically aggressive, given that in October the bilateral trade aimed an increase to US$25 billion, two months later, the target soars to more than a double. China has demonstrated its economic might such that (and rightly) it can come to the rescue of its neighbours in a time of crisis.

As far as maritime issues were concerned, both sides agreed to resolve the disputes peacefully, by respecting legitimate concerns of both the countries on the basis of international law, (UNCLOS 1982) and the spirit of the Declaration of Conduct on the South China Sea (and implementing the agreement on basic principles that guide resolution of maritime disputes). It was decided to instruct the government officials to strictly implement the consensus reached by leaders of both countries during Nguyen Phu Trong's visit to China in October. Nothing concrete came out on the issue.

The visit is significant given its timing. Relations between China and Vietnam were strained in recent time over the South China Sea dispute. China is now reaching out to its neighbour in order to ‘strengthening cooperation in complex and changing international situation’. It does so with carrots of economic assistance. It may be reconsidering its policy of sticks towards its neighbour.

The visit demonstrates China’s attempts at taking control of issues that falls within what it considers its region of influence. It seems alarmed by the developments and configurations that are occurring over and after the SCS issue. China is reaching out to its neighbours on one-to one basis, with a hope to strike bilateral deals, as it always wanted to. In a larger perspective, the strategy seems to counter the US’ presence in Asia. This could be achieved by bringing individual ASEAN members to its side. China is using its soft power skills to revive its relations with Vietnam. During this visit Xi Jinping hailed socialism and historic ties with Vietnam. The rhetoric was ‘similar political system, therefore similar political goals.’

Vietnam echoed Xi’s views. Truong Tan Sang, President of Vietnam stated that Vietnam will look at China as a great friend, as it always did. Prime Minister Nguyen showed commitment to deepen their ‘priceless’ relations by engaging in all fields and ‘educating younger generation about friendly neighbourliness and mutual support.’ With massive Chinese aid coming to their rescue, Vietnam seemed content to not discuss the SCS dispute with any definite outcome.

Vietnam is known to balance its relations. Following the SCS dispute in recent times, on the one hand there have been speculations of it seeking US and India’s support to strengthen its military; while at the same time it wants to maintain its relations with China It’s behaviour towards China (and other actors like the US and India) would be contingent on whether China adopts carrots or sticks. When China shows aggression), Vietnam seeks support from other sources for itself. Likewise it tilts to Chinese carrots with similar ease. It appears that Vietnam is careful not to sabotage its ties with China amidst regional developments and new configurations.

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